KUALA LUMPUR: Google has committed US$2 billion (about RM9.4 billion) to establish its first data centre and cloud region in Malaysia, which will be the largest investment in its 13 years of operation here.
The investment is estimated to support more than US$3.2 billion in contributions to Malaysia's gross domestic product and 26,500 jobs by 2030, according to a Google-commissioned evaluation by AlphaBeta, which is part of Access Partnership.
Google said in a statement the data centre and cloud region will be located in Sime Darby Property Bhd's Elmina Business Park in Selangor.
"The data centre will power services including Search, Maps and Workspace, and will help deliver AI services, while the cloud centre will offer services to local firms and public sector organisations, it said.
"Malaysia and Google are partnering to advance our shared work to create a supportive ecosystem for innovation and unlock the potential of digital transformation," Google parent Alphabet president Ruth Porat said in the statement.
The Malaysia cloud region will join Google's 40 regions and 121 zones currently in operation around the world to meet the growing demand for cloud services locally and globally, as well as AI literacy programs for Malaysian students and educators.
Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz said Google's investment in will significantly advance the digital ambitions outlined in the country's New Industrial Master Plan 2030 (NIMP 2030).
"The Google data centre and Google Cloud region in Greater Kuala Lumpur, in particular, will empower our manufacturing and service-based industries to leverage AI and other advanced technologies to move up the global value chain.
"We also value Google's plan to help us develop a robust talent ecosystem by facilitating the growth of our people's digital skills, businesses, and careers," Tengku Zafrul said.
Meanwhile, economists believes the Google investment highlights Malaysia's appeal as a hub for data centres, cloud services and generative artificial intelligence (AI).
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said Google's greater presence here would certainly boost Malaysia as the preferred destination for data centre.
He added that Malaysia has a vast amount of land, sustainable supply of energy as well as competent workforce that would provide the right ecosystem for companies who wish to set up their data centre.
"Hence, we need to create greater awareness campaigns on how AI can help improve the country's productivity in various areas especially in education, finance, agriculture and many more.
"I suppose the rules and regulation on data protection, cyber threat and all the intricacy of how the AI should be regulated has to be clearly defined. What we want is peace of mind whenever Malaysians engage with AI or other forms of technology that could make us vulnerable," he told Business Times.
Afzanizam added that the investment has positive ripple effects in various industries, including real estate, especially on land acquisition and the construction of the data centre facility.
He noted that there is also other demand for operators, colocation providers, power cable, substation, electricity, water, mechanical and engineering procurement, heating, ventilation and air-condition as well as distributors and systems integrations.
"In a nutshell, the establishment of data centre has a positive spillover effect to the economy," he said.
Tradeview Capital Sdn Bhd vice president Tan Cheng Wen said the investment is in line with Malaysia's aspirations of moving higher up the value chain.
He highlighted that the investment also fulfills the push towards digitalisation as one of its core areas which underscores the importance of data centres.
He also noted that it is imperative that we ensure lasting knowledge transfer is captured and that we are able to replicate it for posterity.
"To fully capitalise on this, we need to ensure our local homegrown talent are in the position to fully benefit from this know-how arbitrage and provide all the opportunities and resources required to realise this aspiration," he said.
Through the investment, Tan said the primary beneficiaries would be Malaysia's tech sector, property developers, and infrastructure providers.
"With more global leading players entering our market, our competitiveness and technical know-how will be further augmented. This will hopefully establish our nation as the premier tech hub in Southeast Asia," he said.
Sunway University economics professor Dr Yeah Kim Leng opined that Google's investment will boost the creation of high skills-high wage jobs.
He added that the investment will also expand opportunities for small and medium enterprises (SMEs) and mid-tier companies to be part of the firm's supply chain.
"Google's sizeable investment has affirmed Malaysia's attractiveness as a hub for data centres, cloud and generative AI services.
"It adds to the impressive list of global hardware and software technology firms that have set up bases in Malaysia, further strengthening its digital transformation and enhancing the competitiveness of local and global players in various sectors of the economy," he said.
Malaysian Institute of Economic Research economist Dr Shankaran Nambiar said with Google's investment, Malaysia will be hurtled into the cutting edge of the digital space.
He said among the industries that will benefit are financial services, cloud services, retail and e-commerce, healthcare, and manufacturing - virtually the entire economy.
However, Nambiar said the challenge will be to become an equal partner in this venture and to ensure that we substantially gain from the investment.
"This means being able to innovate in the tech space to contribute to Google's growth, create spin-offs, apps, and other tools that will establish Malaysia as a global AI hub. Nevertheless, there are two important factors – easing the regulatory burden and growing local talent.
"So, if Google wants a free flow of talent to be sourced from anywhere in the world, our regulatory framework must facilitate this, not act as a barrier," he said.